Research On Opportunistic Behavior In Suning Tesco’s Multi Period Employee Stock Ownership Plan

Employee share ownership plan is a new style of long-term incentive mechanism for modern enterprises.By granting shares to some employees,the company shares the value appreciation of the company’s development to its employees,achieving the long-term incentive effect of improving employees’ work motivation and encouraging them to participate in corporate governance.in June 2014,the CSRC issued the Guiding Opinions on the Pilot Implementation of Employee Share Ownership Plan for Listed Companies,which stipulates the key elements that need to be noted for the implementation of employee share ownership plan and has an important role in the The Guidance on Employee Share Ownership Plan has an important guiding role in the standardised development of employee share ownership plans in China’s listed companies.However,with the increasingly fierce competition in the domestic market,the increasing difficulty of corporate governance and the gradual and widespread implementation of employee share ownership plans,problems in the implementation of employee share ownership plans have come to the fore,one of which is the opportunistic behaviour in employee share ownership plans.This paper takes the four-phase employee shareholding plan of Suning.com as the subject of examination.Firstly,the event study method was used to analyse the cumulative excess return characteristics of the case company’s draft employee share scheme around the announcement date to make a preliminary determination of whether there was opportunistic behaviour;secondly,further evidence is drawn from the disclosure of surplus information and the level of surplus manipulation of the case company;finally,the opportunistic behaviour is identified in terms of both the crisis of pledging of equity by the major shareholder and the self-interested behaviour of management in avoiding risks Motivations.The study of the case company found that: the management of Suning Tesco had timed the release of unfavourable and favourable news before and after the draft announcement,timed the disclosure of surplus information and manipulated the level of surplus in order to reduce the subscription price and the difficulty of exercising the rights;the controlling majority shareholder of Suning Tesco had pledged its equity continuously for many years,using the employee share ownership scheme as a means to raise the share price,prevent the risk of closing out the position and reduce the risk of losing control In order to avoid the company’s development difficulties and reduce the risk of losing the incentive plan,the company’s management has transferred its shares and sold its subsidiaries several times to obtain a large amount of investment income in order to achieve the performance assessment target more easily.Combined with the above research,this paper puts forward suggestions in terms of improving the internal governance of companies and the external regulatory environment,in the hope of providing references for improving the effective implementation of employee share ownership plans in listed companies and reducing the impact of opportunistic behaviours.